Breaking Down the Seven Lies Bitcoin Fans Tell Themselves

The meteoric rise of Bitcoin’s value (and its subsequent relative fall) did wonders in intensifying attention to the controversial cryptocurrency’s—in fact, all cryptocurrencies’—movements. The world simply couldn’t help but sit up and take notice, wondering if they should get in on the Bitcoin bandwagon, or give it a wide berth and dismiss it as nothing more than a fad.

While Bitcoin has an army of fanatical proponents, it also has its fair share of detractors, so being caught in the middle is bound to be confusing, indeed. Regardless of which side of the cryptocurrency issue you are on, “caution” is still the watchword—and one that will serve you well, as you delve into the murkiness of the altcoin pond. Forbes magazine contributor Jason Bloomberg recently wrote about the “Seven Lies Bitcoin Fans Tell Themselves.” But despite the seemingly telltale header that is angering numerous Bitcoin fanatics, it actually only emphasizes the theme of erring on the side of caution. So let us take a look at the points he raised:

Lie 1—Bitcoin is like other currencies.

A common fallacy used by Bitcoin fanatics to sell the idea is that Bitcoin is just like every other currency in the world. This, however, is a blatant lie because simply put, Bitcoin is unlike any other currency that has ever existed. It may have a handful of similarities to the US dollar or any other medium of trade, but the fact of the matter is the differences are far more plentiful.

For example, when it became known that Bitcoin is used a lot in illicit, even illegal transactions, fans are quick to point out that so is the US currency. This line of reasoning is considered moot as it does not draw any real conclusions.

Lie 2—Bitcoin is secure.

“Crypto” translates to “secure,” so most people assume that cryptocurrency like Bitcoin is secure. The fact of the matter is, it is not. In fact, it is easy to lose and easier to steal. Every time a vulnerability in the system is addressed, another one almost automatically pops up to take its place.

Lie 3—Bitcoin is money.

Currency does not automatically translate to money. In fact, it has very few of the properties of money. Instead, it is more of a speculative commodity than anything else. This is another aspect where the differences outweigh the similarities.

Lie 4—Bitcoin has intrinsic value outside of its minability.

This is a fallacy because Bitcoin’s intrinsic value, that is to say, the value beyond its market value, is completely dependent on the fact that it needs to be mined. Case in point, one Bitcoin costs somewhere between $800 and $1,500 to mine. By buying one Bitcoin, you are essentially paying for the labor of mining it, which means you have to make it worth the miner’s while by paying them more for their trouble. On the other hand, if you want to sell that same Bitcoin, your asking price is completely dependent on what people are willing to pay for it—that is to say, its market value. And if it doesn’t sell, then it still would have caused you more to buy it in the first place.

Lie 5—Bitcoin is not in a bubble.

Despite fanatics insisting that Bitcoin is not, the sad fact is it is a giant bubble. In a nutshell, its value is pure speculation—meaning, it depends almost entirely on what someone is willing to pay for it. This is why its current market value has been vacillating between $15,000 and $20,000—it’s a fool betting that an even greater fool will bite.

Lie 6—The Bitcoin you are keeping is making you money.

The only way you can make a real profit from your Bitcoin is by selling it for real money. There really is no way around that. Otherwise, the profit you think you are making by holding on to it is nothing more than paper profit. And the more people decide to cash in and take their profits, the more the value will drop and, by extension, your paper profit will too.

Lie 7—Jason Bloomberg is the bigger liar.

This is what most Bitcoin fanatics would have you believe of just about every Bitcoin naysayer, Jason Bloomberg included. And whether you agree with this or not—or believe in Bitcoin or not—is all up to you.